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In a document of more than 80 pages, the Chamber of Commerce and Industry (Cci), seized by the company Savannah energy, took several decisions including that of banning Chad, SHT Overseas and DPII, now called SHT Doba Pipeline Investment Inc., to prevail against third parties or parties to the Articles of Cotco, until the resolution of the dispute on the merits.
After having detailed the facts since the nationalization by the Chadian State of the assets of Esso, acquired by Savannah energy, the Chamber of Commerce and Industry, through the emergency arbitrator, Marc Henry, declares itself competent to rule on requests for emergency measures requested by the requesting Party; declares admissible the requests for emergency measures requested by the requesting Party.
The emergency arbitrator orders “the suspension of the effects of the resolutions adopted at the general meetings of Cotco on May 24, 2023 until the resolution of the dispute on the merits; the suspension of the effects of the resolutions adopted during the Cotco Board of Directors on July 4, 2023 until the resolution of the dispute on the merits”.
The CCI prohibits the Republic of Chad, SHT Overseas and DPII, now called SHT Doba Pipeline Investment Inc., from relying on third parties or parties to Cotco's Articles of Association until the resolution of the dispute on the merits; suspends the holding of the meeting of the Board of Directors convened on July 26, 2023 by the new Chairman of the Board of Directors until the Arbitral Tribunal constituted on the merits rules on the holding of this meeting; suspends the holding of the combined general meeting convened on July 26, 2023 by the Chadian shareholders until the Arbitral Tribunal constituted on the merits rules on the holding of this meeting.
The emergency arbitrator rejects the request for a declaration that the composition of Cotco's board of directors is that registered with the Registry of the Court of First Instance of Douala-Bonanjo on June 6, 2023 until the Arbitral Tribunal constituted on the merits decide on this question; the request to prohibit COTCO from making any payments from its accounts or from moving accounts between its accounts, except for the payment of its employees, taxes and its existing subcontractors and suppliers essential to the operation of the pipeline until a resolution of the dispute on the merits.
https://dworaczek--bendome-org.translate.goog/v2/affaire-savannah-energy-la-cci-interdit-le-tchad-a-se-prevaloir-a-legard-des-tiers-ou-des-parties-aux-statuts-de-cotco-jusqua-la-resolution-du-differend-au-fond/?fbclid=IwAR1XFKDAVhJnL_lrqpzd8Qpe3KCHWJQdGAFxbw59yCmSqUGRkREHSQw78E0&_x_tr_sl=fr&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=wapp
Facebook page with extracts from the ruling: (in French)
https://www.facebook.com/photo?fbid=6436872976403056&set=pcb.6436873399736347
K - good find. Do you know what it is telling us in simple terms as i find it all very confusing.
It seems to be saying that Cotco can not transfer any monies from their accounts until the arbitration tribunal give their definitive ruling. It's basically an injunction stopping Chad siphoning off any money that may be due to Savannah if the tribunal rule in their favour. So definitely a positive bit of news.
Komakino - I believe it also alludes to Cotco previous general meetings being void as well and re-structure of Cotco will only be permitted following arbitration ruling........... or something along those lines.
So Chad won't be getting the $80m it suggested from uplifts this month, that could have an effect on Deby's budget plans
Yes, it does, suggesting that the previous Savannah directors replaced by Cotco are in fact the de facto directors. Given the restrictions it has placed on Cotco it possibly suggests that the full tribunal ruling won't be too far away. Hopefully, at any rate.
K - would love a quick ruling. And as Chad Gov can’t be trusted and more than likely will never play ball, how about this for an outcome:-
Retain our 41% of COTCo and still sell 10% to SNT for $44.9m
Keep getting paid our dividend from COTCo
Forfeit Doba oil back to Chad Gov / SHT
Be awarded $1bn+ as compensation and be guaranteed payments from liftings in Cameroon
I’d take that all day long pal. What do you think?
Absolutely RR, that would be very acceptable for sure. That, along with the closure of the SS transaction and we could all relax at last!
Considering the aggressive nature in which Chad nationalised the assets one would hope that the ICC are also able to expediate the arbitration process and grant a final ruling to only question that would remain is how would the ICC be able to enforce a ruling on Chad as that would be tricky i am sure that they would have certain powers in place to be able to enforce a ruling one option may be that the ICC is able to do a force majeure on Doba oil field crude liftings from the kribi terminal to force chad arm into complying................................
I see this as a very positive development. Whether the cash would have ever benefited the people of chad is a moot point, but the ICC could perceive any delay in judgement would have a negative impact on the lives of the ordinary people of Chad.
Chad may also now see the merit of getting around the negotiating table.
Whether SAVE would want to negotiate is open to question. Talking to SJ at the AGM he reiterated that the Board are very confident of success and guided me to review the outcome of all similar arbitration hearings and quoted claimants 100% success rate.
Who knows may even get settlement with Chad or from Abitration in AD Doc, though i think $1b is pushing it a bit.
LST - I fully appreciate $1bn is a huge number and may be nothing like that. But think of it this way. We had bought 11kboepd of production along with large 2P reserves. The assets were ours and fully funded. Whilst I appreciate we would not receive the full cost of each barrel, from a gross revenue point of view $1bn looks like this:-
$1bn / $80boe POO / 11kboepd = 1136 days which is just over 3 years. I’m sure we’d have stood to gain a lot more than that with further field development.
Personally I’ll be glad and expect to win an award and will be disappointed if it’s much less than $1bn. But let’s see and we may hopefully find out before the end of the year.
Saves initial cost for the Exxon assets was put at $372m & up to $50m contingent.
This was for 40% of the Doba Oil project which was approx 12,000 bopd + 55.4 mmbo 2P + 44.1 mmbo 2C. Pipeline interest of 40.2% in TOTCo & 41.1% in COTCo.
Save said they were going after what they had lost and would lose as a result of the nationalisation.
At the minimum in the relisting presentation - Saves 9 year free asset cash flow was estimated at $76.5m/yr average = $688.5m and when added to the purchase price = $1060m before contingencies.
The FCF without re-investment even if it was all profit and taxable at 30% leaves an overall 9 year figure along with the original purchase price coming down to around $850m .
Separately FinnCap on the 27/3/23 had a valaution of $368.2m for the 2P, $297.3m for both pipeline interests, $131.8m for the 2C and $41.2m for pipeline upside = Total $838.5m.
Given Save were prepared to sell 10% of COTCo for $44.9m - strip out a pro-rata 41.06% in total for COTCo and 90% of the upside figure - in total $221m - it should leave some $600m to chase (not counting the 41.06% of COTCo or $221m stripped out which should never have been in doubt as it's not part of Chads remit).
On the basis of 1420m fully diluted shares £1/$1.30
$600m compensation = 32p/share.
COTCo 41.06% valaution pro-rata based on currently intended 10% sale $184m = 10p/share.
$170m owed to Exxon ?? = less 9p/share..
If successful, how it's paid is anyones guess but with access to bank accounts and the country being landlocked it should be possible to recover the cash some way.
At this point I would even be willing to take operatorship of assets and formal approval from chad without any compensation if it came to it and if it meant that the decision was made in swiftly and quickly. That alone would be valuable to us.............................. Plus it will allow Chad a clean break without penalisation after they tried to pull one over us especially if it meant we could continue our renewable projects there.
The pro-Chad press are not talking about Chad giving in, rather enforcing their rights. Here is an example
'The ICC pre-arbitration procedure
After having tried, without success, to interfere with the social life and operations of COTCO and launched multiple procedures in Cameroon which have so far been unsuccessful, Savannah Energy relied on a pre-arbitration procedure, without enforceability, introduced on July 12, 2023.
The order resulting from this emergency procedure on July 28, 2023 purports to review the effect of certain decisions of COTCO's corporate bodies and will, on these points, be vigorously contested by COTCO and the Chad through all possible legal remedies during the arbitral proceedings on the merits. Savannah Energy's mercantile aims cannot outweigh Chad's vital economic stakes.
Moreover, the pre-arbitration order is damning for Savannah Energy. Indeed, the emergency arbitrator refused to acknowledge that the Savannah directors have citizenship on COTCO's board of directors, and stresses that COTCO, represented by its current Cameroonian general manager, must have free access to the all of its funds to avoid any impact on the operation of the Chad-Cameroon pipeline. The arbitrator also confirms that the alleged objections raised by Savannah Energy in relation to the acquisition of Petronas' interests in Chad and in COTCO cannot be taken seriously. The arbitrator also found that Savannah Energy is unable to justify any authorization validating its illicit acquisition of the Esso entities, which invalidates any presence of Savannah Energy in COTCO. So, as the Chadian authorities will demonstrate during the dispute resolution procedure on the merits, it was Savannah Energy that caused its own loss. And it is Savannah Energy which seeks by all means and without success to capitalize on an illicit acquisition.
Pending the resolution of the dispute on the merits, it was necessary for COTCO shareholders to secure the continuity of decision-making within the corporate bodies and operations of the company that operates the pipeline, a strategic asset for the economy of Chad. and security of the sub-region. The shared management of COTCO between Chad and Cameroon makes it possible to envisage the operation of this major infrastructure with full confidence. '
https://www-alwihdainfo-com.translate.goog/Gestion-partagee-du-pipeline-Tchad-Cameroun-Savannah-introduit-une-procedure-pre-arbitrale_a125183.html?fbclid=IwAR3UMIJk3PQvzRJAQu7ldWL4scJGvRARRcRBVd32P_P8aWWFS7l2q9xZa9s&_x_tr_sl=fr&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=wapp
Hi TIL. In response to your post today at 11:07, this may be of interest.
https://en.m.wikipedia.org/wiki/Asset_freezing
When we relist, shares should trade at a premium just for the entertainment value, tbf.
By contrast Shore Capitals anaylsis 3 months ago on 27/4/23 used $260m for an arbitration award on top of their $200m Chad-Cammeroon ETS valuation.
The paragraphs below suggest Save owed no more than $100m for the deal - not $170m as they have $70m of that cash on their balance sheet (can they use this for S.Sudan?).
Overall that would indicate a value if that award amount was successful along with the pipeline interets less $100m owed to Exxon max = about 19.5p overall net.
"The headline acquisition price for Chad was $407m, although we estimate that the final completion amount was less than $100m due to the presence of effective date and completion adjustments.
Assuming that Savannah drew down an amount apprroaching the maximum $170m under the Exxon facility, this would imply that a significant proportion ie >US$70m continues to sit on Savannahs balance sheet. This would seem consistent with the $217m of reported gross cash held at the end of March 2023. "
On the above basis re Accugas/Cotco revenue - they estimate closing net debt in 5 months (yr/e 23) of $257m.
Another article covering the ICC ruling
https://ecomatin.net/controle-de-cotco-savannah-remporte-larbitrage/
Clearly the chad press are putting a different spin on the arbitration saying it's bad for Savannah bad they are clutching at straws there